Did I get your attention? Good. My apologies in advance to use such a response eliciting headline, but that is exactly the point this blog will be all about.
(this heading above by the way may, or may not, be false. Let me explain later on)
As a mentor of mine says so well, “Attention is the new currency.” Knowing that it is no surprise that the media wants to get your attention. Their very own existence depends on it. They need advertising revenue, which comes from readers (whether it be online or print) to sustain their businesses. While there is certainly nothing wrong with that business model, I do have some issues with the tactics they use to gain your attention.
We all can agree that as proud residents of the Lower Mainland, everyone is completely obsessed with real estate. We need to know what happened to our neighbour's home down the street. We love to look online at our future dream home. REALTOR®.ca is open to a saved tab on our iPads for easy access. We all are also guilty of devouring clickbait when it comes to the stories surrounding the prices of the homes in our communities.
The media knows this. Slow news day? Put something out about real estate prices and watch the readers click away. An article came out last week that really shook some of my clients and many of my colleagues. It had a catchy headline, a big buzz word attached to it and it announced yet poorly described what is truly important to a local homeowner. The price of their home.
CMHC sees home prices falling up to 18%
My goal with this blog is to help you dissect some of the attention-grabbing headlines we see all the time in Vancouver and surrounding areas.
First, let’s start by noticing some of the buzz words used all too frequently.
- plummet ie. Sales of North Vancouver homes plummet by 32%
- crash ie. The great real estate crash of 2020
- bottom ie. When will Vancouver real estate prices see the bottom?
- flatline ie. Is real estate in the Lower Mainland about to flatline?
- drop ie. Sales in Canada drop by 54% in 1 month
While there are many more buzz words that could be used, there is no denying that they certainly grab the attention of anyone that owns a home. This is the point which ties in nicely to the second part of the media's next little trick, using statistics to grab your attention, most of the time completely irrelevant to your home.
- CMHC predicts up to 18% drop in home prices
- Metro Vancouver home sales fall 44 percent in May 2020
- April 2020 sales on par with 1983 through to 1985 numbers
Where this gets interesting, is everything above is a real headline released within the last few weeks.
So what does a homeowner do? Freak out? Sell everything and move onto a boat?
The answer: get educated.
Here are a few facts.
There is no such thing as a national housing market. There is no such thing as a provincial housing market. There is no such thing as a municipal housing market. There is, however, such a thing as a hyper-local, house-type dependant housing market.
How about a few more facts?
A reduction in sales volume does not equate to anything other than a reduction in sales volume. The market for detached homes in West Vancouver has zero relation to the market for condominiums in Cloverdale. The opinion of a journalist/economist/media organization is always just that, an opinion. A reduction in sales volume has little reflection or relation to what is happening with prices. It could in conjunction along with may other factors, but sales are not the single driver of the effect on pricing.
Here are 4 magazine covers from 2009-2013 from Maclean's magazine, a pretty trusted publication. They are a little concerning….
My snarky comment would be for anyone waiting around for the great crash in Metro Vancouver since 2009-2013, how did that work out for you?
The benchmark price of real estate in the Fraser Valley in January 2013 was $446,700. In January 2020, it was $824,200.
So much for those predictions… I bet these headlines and cover pages paralyzed a lot of people from making decisions too.
So how about the most recent one as mentioned above…
CMHC sees home prices falling up to 18%
Now that we know a little more, let’s make the headline a little more clear.
- This is a national, approximated number. I live in the Scottsdale area of North Delta BC, not in the general Canadian real estate market this refers to. My local market has nothing to do with what is happening, in let’s say, Regina. (Sorry Regina)
- This is an opinion. Not to say it is not educated and researched, yet if they have the world’s first crystal ball, I would love to see it.
- Will all sales equally fall 18% across the board in Canada? Or is there such things as a hyper-local market for each community. (Hint… yes there is)
As you can see, you need to look past the headline and start asking better questions.
So when it comes time to cut through the noise when it comes to real estate in the media, always remember these key reminders
Watch for buzz words- If they use a buzz word, they are trying to get your attention
Dissect the information used- As Mark Twain famously said “There are three kinds of lies: lies, damned lies, and statistics.” His point? Statistics can be manipulated to create whatever point the author is trying to make.
Get your own information. Ask me (or your REALTOR® if you already have one) for information specific to your home.
Your home is not a statistic- Every sale is different and the market changes every day.
remember real estate is hyper-local- The biggest thing that affects the value of your home is the supply and demand for the type of home you have in your neighbourhood. Forget the noise about any opinions or statistics that are out of the local area, provincial or national information.
Real estate is (and should be) a long term game- Prices can and will fluctuate however history has shown us repeatedly that slumping values in Metro Vancouver are short term. While there is no guarantee the future will predict the present, I bet anyone that pressed pause on their home buying since 2009 until now sincerely wishes they had no clicked on the link about falling home sales or prices Canada wide. The housing market is not the stock market, so be careful not to mix the two when it comes to the idea of sudden changing values.
Armed with this knowledge, you now will be better-equipped to read these articles from an informed position being able to better question the real message behind the headline. For those of you that choose to get your real estate information from local media, be weary of or simply avoid the clickbait and take it for what it is in most cases, entertainment rather than relevant information.
Until next time,